With 2015 fast approaching, employee benefit decision makers are scrambling to ensure that they stay ahead of the curve particularly as the Affordable Care Acts employer mandate kicks in next month. As employers look to increase benefit offerings and weather rising health care costs, below are the top five areas everyone should be paying attention to.
Building wellness programs
We all know that 2015 is the year of the ACA and for most employers with 100 or more employees, its beginning to sink in that now its for real. At the same time, many employers are seeing their health care premiums rise, which adds a layer to the work being done right now. A properly administered wellness program can help an employer reduce premiums and promote a healthier and more productive workforce. However, many employers are having considerable difficulty understanding the rules for wellness plans, since there are still questions about them under the ACA, the Americans with Disabilities Act, and relevant employment laws and regulations. Given that there is considerable uncertainty in the law in this area, as a first step in implementing a properly administered wellness plan it is important that these programs be voluntary.
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Micro networks to minimize costs
Most major carriers are expected to implement smaller network options. Theyre looking for ways to minimize costs for employers within the framework of the ACA, which requires them to deliver affordable insurance to everyone, regardless of pre-existing conditions. Employers who are considering joining a micro-network should allow plenty of time to plan and investigate the opportunity. Given the very specific provider parameters around a micro-network, employers need to understand their employee population and the provider options available, and how they mesh, or dont mesh. Its best to start by looking internally to get a good reading of employee health care needs, including how they access healthcare providers today. From there, employers should examine whats available externally to gain an understanding of the provider network available to them and their employees.
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Adoption of private insurance exchanges
Employers are gravitating more and more toward private insurance exchanges as they look for better ways to deliver health insurance to their employees. Rather than continuing to assume the responsibility for making health care decisions for plan participants (or managing the risk on their behalf), employers are transferring responsibility to employees and essential making them better consumers of health care. At the same time, employers have something to gain too: predictable health care costs. The challenge is that its not a simple switch you flip. In fact, the move to a private exchange could be difficult for employees who generally are not accustomed to making benefits plan decisions for themselves, or who balk at the potential of an increased out-of-pocket burden. Its incumbent upon employers to guide employees through the transition to help them accept the idea that having more power and choice is a good trade-off to taking on more risk. To do this, the employer must introduce a defined contribution approach to the workforce and embrace concepts like premium transparency, fixed dollar contributions and multiple plan options.
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Using forensic underwriting
As employers investigate ways to reduce benefit costs, a growing trend is the practice of forensic underwriting. Its the act of auditing the employers existing insurance rate structure and working with carriers to reduce annual increases. Understanding how carriers formulate insurance rates is the foundation of forensic underwriting and the first step to reining in annual renewal hikes. Underwriting, as we all know, is the premise of carrier profit. With that in mind, carrier underwriters are often amenable to negotiation as long as counter-offers are logical and make sense and the resulting renewal rate is sustainable. As long as brokers approach insurer underwriters with the goal of developing a win-win scenario, its possible to create a beneficial outcome for everyone.
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Cyber insurance
About 80% of cyber attacks are focused on theft or loss of information as opposed to taking down a system. As executives look to safeguard their intellectual property, customer information, financial data and employee records, theyre also looking to protect against the inevitable financial hit. Instead of thinking about cyber insurance as an expense, employers are increasingly viewing it as a cash flow tool. If a business system is attacked and high-priced consultants have to be hired to fix the problem, a significant cash flow will be required to cover the expense. There could be lawsuits by customers to deal with and significant loss of revenue, not to mention hard-to-overcome reputation damage. The risk is real. The loss can happen in an eye blink.
Brian Feeley is senior vice president of marketing for Corporate Synergies, an employee benefits consulting firm and private health care exchange vendor. He can be reached at
